8:14 | ? -l Part I. Multiple Choice Question (pick up only ONE correct answer). 1. Which of the following about Cobb-Douglas production function is correct 2 A) Cobb-Douglas function has a changing share of labor and capital income. B) Cobb-Douglas function has a constant share of labor and capital income. C) Cobb-Douglas function shows the combination of capital and labor only. D) Cobb-Douglas function shows the determinants of Nominal GDP. 2. Consider national income of one country, we can measure its profitas ? A) Economic profit of this country equals its capital income. B) Economic profit equals national income minus capital income. C) Accounting profit of this country equals its capital income. D) Accounting profit equals national income minus capital income. 3. Which of the following about the Gini Coefficient is NOT correct 7 A) Gini Coefficient is higher when income inequality becomes lower. B) Gini Coefficient is a measurement of income inequality. ) Gini Coefficient increases if the portion of middle class's income shrinks. D) Gini Coefficient has a value between 0 and 1. 4. The $1.9 trillion economic stimulus COVID-19 Stimulus Package or American Rescue Plan was signed into law by President Biden on March 11, 2021. This package aims to speed up the economic recovery from the COVID-19 pandemic and ongoing recession in the United States. In macroeconomics, this package is an application of ? A) Monetary Policy B) Fiscal Policy C) Trade policy D) Consumer Policy 5. In a closed economy, income equals expenditure because of which of the following ~ ? A) GDP does include all expenditures. B) The influence of governments on individual markets. C) GDP does not include intermediate goods in some cases. D) Total expenditure of consumers must be equal to the income of producers. Part II. Open End Questions & inst-fs-iad-prod.inscloudgate.net 8:14 all @m) Part II. Open End Questions Note: To get full credit, you need follow instructions of the question, and present correct and detailed (step-by-step) answer to the question. Question 1. National Income and its Determinants Suppose in a pizza restaurant, its total output (number of pizzas made per hour) can be presented as the table below. It shows you the number of pizzas made with respect to various number of labors input per hour. Number of Labor Total output / Number of Labor Total output / hour hour 1 10 pizzas 4 31 pizzas 2 18 pizzas 5 36 pizzas 3 25 pizzas 6 40 pizzas (1) If the net price (excluding material costs) of a pizza is $5.00. And the nominal wage of a worker is $20.00 per hour. How much is the real wage in this case? And how many workers should be employed (per hour) to maximize its profit. Note: for full credit, you need to show step by step answers. (2) Now suppose the price of pizza goes down to $4.00 per unit, ceteris paribus, how many labor(s) should be hired to maximize the profit? AA @& (-fs-iad-prod.inscloudgate.net C, 8:14 all @m) Question 2. Cobb-Douglas Production Function For a country, its national output or income (Y) follows a Cobb- Douglas function as below. For example, the function in 2021 is . Here K indicates total capital input and L is total labor input. And we have a.=0.5. (1) What is the share of capital and labor of total national income? If K is 64 and L is 121, how much is the total output in 20217 (2) In 2021, if both capital (K) and labor (L) inputs increased by 100%, then how much national output (Y) will change as percentage? (3) In 2022, the government introduced tax credits for overseas investors. Thus, more capital is available in the market. At the same time, new technology has greatly improved production efficiency. And the Cobb-Douglas function in 2022 becomes . Then, how much GDP has grown in 2022 compared with the year before (assume is the same value). AA @& -fs-iad-prod.inscloudgate.net C, 8:14 ull @m) Question 3. Loanable Funds (LF) Model In a closed economy, suppose we know national output Y =C + I+ G. The values of Y, C, I and G are given as below. * Y =1,000. * G =250. * T=280. * C=120+0.75%(Y - T). * [ =150 20*r. Here r is the equilibrium real interest rate (as %o). Given values as above, finish the following questions. (1) How much is the Private saving, Public saving, and National saving in this economy? (2) How much is the equilibrium real interest rate (r as %). (3) If government spending (G) goes down to 230, then how much is the new equilibrium real interest rate (r)? & inst-fs-iad-prod.inscloudgate.net